Pizza Fusion Acquired by Pittsburgh-Based Company

Unique Pizza and Subs Corporation announced that it has signed a Definitive Agreement to acquire privately held Pizza Fusion Holdings, with closing expected by the end of the third calendar quarter. Pizza Fusion will become a wholly owned subsidiary of the parent company Unique Pizza and Subs. The company announced on March 2 it had signed a binding LOI for the transaction.

The business combination capitalizes on Pizza Fusion's acclaimed organic menu offering, eco-friendly practices, sector leadership position, and global growth business plan. Further, it brings together and leverages Unique Pizza's highly cost effective franchise business model, which enables the prolific roll up and rebranding of existing mom and pop pizza restaurants under the Unique Pizza and Subs brand.

Additionally, it combines both companies' veteran, restaurant industry senior management—and their successful track records—into one integrated team to exploit the operating synergies between the companies. Collectively, the two companies will seek to capture market share with both the organic and conventional pizza business in carefully targeted markets in the U.S. and globally.

Pizza Fusion was the world's first restaurant chain to adopt organic restaurant certification. Today, it has 21 franchised locations, with 13 in the U.S. and eight in Saudi Arabia.

In the next 12 months, the Unique Pizza and Subs Corp. business plan envisions: opening at least one flagship corporate Unique Pizza and Subs sports bar and training center in the Pittsburgh market; opening at least one flagship corporate Pizza Fusion restaurant and training center in the U.S.; replicating its success by franchising both restaurant concepts throughout North America and internationally in the primary markets and converting existing mom and pops in the secondary markets; and forging strategic partnerships with major U.S. and transnational food service industry leaders.

"This is a win-win transaction for shareholders and pizza aficionados everywhere,” says Pizza Fusion cofounder and CEO Vaughan Lazar. “As a newly public company, Pizza Fusion will raise its profile nationally and gain access to public capital markets to support future growth plans. As we grow, many more thousands of Pizza Fusion customers will have a new healthy casual dining choice as well as the opportunity to participate in our future success."

"The acquisition will merge two industry leading pizza companies which emphasize innovation and place extraordinary value on products of unrivalled quality,” says James Vowler, Unique Pizza and Subs president and CEO. “Having these two great pizza brands under the same roof will create a diversified international franchise with the ability to succeed in any type of market or economy and meet the rapidly evolving food and health conscious preferences of today's consumers worldwide. Whether we enter into a new market as a result of an interest in Unique or Fusion, we will deploy our resources and team to expand both non competing brands within that region."

Under the terms of the Definitive Agreement, UPZS will acquire 100 percent of the shares of Pizza Fusion Holdings in exchange for restricted UPZS shares which, upon issuance, will constitute approximately 20 percent of the issued and outstanding shares of common stock of the Company. UPZS will also make a capital infusion into Pizza Fusion of $1 million for working capital. Pizza Fusion will be operated as a wholly owned subsidiary of Unique Pizza and Subs. Closing is contingent upon these and other customary conditions including completion of due diligence by both parties.

Three billion pizzas are sold annually in the U.S. Pizza store sales are $36 billion annually. The average consumer eats pizza nearly three times per month.

By offering affordably priced, natural, and organic food, Pizza Fusion also addresses the fastest growing segment in the food industry. U.S. organic food sales rose from $6.1 billion in 2000 to $31.4 billion in 2011, a compounded growth rate (CAGR) of about 16 percent vs. 3.3 percent for conventional food. This trend has driven sales, earnings, and share prices at industry leaders, such as specialty grocer Whole Foods, to record levels.

In its August 3 research update on Whole Foods, titled "Strong Organic Food Trends Provide an Underpinning for Comps," Morgan Stanley Smith Barney analysts reported: "US sales of organic products have increased steadily over the past decade, and demand is showing no signs of slowing down. Total sales in organic categories increased from $26.6B in 2009 to $28.7B in 2010 and $31.4B in 2011 (9.5% y-o-y growth)."

Looking ahead, the secular macro trends are strongly positive as 75 percent of U.S. families buy organic products at least occasionally, chiefly for health reasons. One third of consumers now use organic foods at least monthly and 31 percent of U.S. families report they are actually buying more organic foods compared to one year earlier. Organic food sales account for almost 11 percent of all product sales in the U.S.

"Now, a growing number of pizza lovers don't have to choose between the food they enjoy or food that is good for you,” says Randy Romano, Pizza Fusion president. They can do both. Economically, we are merging the casual serve dining segment, which historically has been one of the most growth intensive areas of dining, with the organic foods industry, which is experiencing a dramatic and lasting increase in popularity—outpacing supply in many sectors."